Also, Srinivas said pre-packaged resolution would be in place in two years’ time. It had been first reported by Business Standard that the government was considering a pre-packaged insolvency
Srinivas also said that Section 12(A) allowed out-of-court settlement if 90 per cent lenders allowed the withdrawal of the insolvency
application against a borrower in the pre-pack insolvency arrangement, but the UK insolvency law on this kind of arrangements needed NCLT’s approval. Srinivas said: "It will take time to reach the UK model but that is being worked out."
The government is looking at group insolvency, as the actual borrowing in many companies is found at the subsidiaries and not the parent company. Since the inception of the IBC, borrowers were becoming conscious of loans they had taken, said Srinivas, adding that at the time of insolvency proceedings being triggered against a company, Rs 2 trillion worth of loans had been settled out of court. Under the insolvency regime, around Rs 3 trillion has been recovered.
Srinivas added that 4,500 companies had seen resolution under the code, and that he was of the view that banks and corporates both were appraising the loan by checking its viability.